Meralco distribution charge slashed by P0.1752/kwh

by Myrna Velasco, 10 July 2015
from Manila Bulletin

The distribution charges of Manila Electric Company (Meralco) had been cut by P0.1752 per kilowatt-hour (kwh) to P1.3810 per kwh, based on a ruling rendered on Friday (July 10) by the Energy Regulatory Commission (ERC).

This was slashed from Meralco’s prevailing average distribution tariff of P1.5562 per kwh for the full regulatory year of 2015 – as referenced on its previous regulatory approval under performance-based rate setting regulation.

The newly-approved lower distribution cost accounted for overall cut in the supply, metering and distribution charges which directly impact on Meralco’s revenue stream as a utility service provider. These are now set at average: P1.0114 per kwh for distribution charge; P0.2251 per kwh for supply charge; and P0.1444 per kwh for metering charge.

ERC executive director Francis Saturnino Juan has made the initial announcement on the utility firm’s approved rate reduction as based on calculated maximum average price (MAP) of PBR.

It is seen benefitting Meralco’s customers starting in this July billing and will be carried through over a one-year regulatory period.

“The said rates are 11.26 percent or P0.1752 per kwh lower than the current average rate of Meralco at P1.5562 per kwh,” the regulatory body has reiterated in a press statement.

The expectation of Meralco is that its lower distribution charges will offset the estimated increase in the generation charge component of its bill this month.

In fact, the distribution firm has moved the dispatch of billing to some customers so it can already reflect the downtrend in Meralco’s distribution charges.

Meralco spokesperson and assistant vice president Joe Zaldarriaga has qualified that the company “has yet to receive the actual order”, but as gleaned, the actual tariff reduction ordered was about 11.3 percent.

Zaldarriaga thus emphasized that “we see overall bills for households go down and effectively offset the increase in generation charges which went up by P0.28 per kwh.”

The lower distribution cost accounted for overall cut in the supply, metering and distribution charges which directly impact on Meralco’s revenue stream as a utility service provider.

The company has indicated early this week that generation charges will go up because of the more costly purchases from the Wholesale Electricity Spot Market (WESM) and the shift to more expensive fuels of its contracted independent power producers.

Juan has qualified though that the approval is still “interim” and a final determination on Meralco’s 2016 MAP will be rendered following its conduct of public hearings and other required regulatory procedures on the tariff filing.

Zaldarriaga, on Meralco’s part, has emphasized that “we will have a clearer view once we receive the order.”

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